U.S. government debt yields rose Friday after President Donald Trump's tariff announcement sparked fear of a trade war and more robust inflation.
The yield on the benchmark 10-year Treasury note rose 6 basis points to 2.868 percent at 4:31 p.m. ET, while the yield on the 30-year Treasury bond was up 6 basis points at 3.143 percent. Bond yields move inversely to prices.
Fears of stronger inflation as a result of higher materials prices and foreign retaliation sent yields up across the board Friday. The United States is expected to set tariffs of 25 percent when it comes to steel and 10 percent for aluminum, which could emerge as soon as next week and put pressure on companies both domestically and internationally.
"Trade wars and tariffs are bearish for bonds because they raise inflation," said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research. "Particularly when we look at steel and aluminum, they're a part of a lot of things we use: autos, beer cans — you name it."
"If [the tariffs] go through — and they're substantial — it'll be passed along to the consumer," she added. "Ultimately, tariffs tend to slow economic growth ... People are looking at it and saying if we get some versions of this and retaliation, it's just a lose-lose situation."
News of the tariffs was met with criticism from a number of leaders including European Commission President Jean-Claude Juncker, who stated that the move "can only aggravate matters." Some on Wall Street have argued that the taxes represent a message to China, seen by the Trump administration as an ever-growing economic rival.